Food Prices Rising… Big Companies Say “You Ain’t Seen Nothin’ Yet”…



“We can’t raise prices fast enough to keep up with the rising cost of our inputs,” Tyson CEO Richard Bond said in a conference call last week. His company’s chicken business posted a whopping $61 million operating loss for the quarter ended March 31.

Added Pilgrim’s Pride CEO Clint Rivers: “As a direct result of these soaring grain costs, a growing number of food companies are shutting down plants and eliminating thousands of jobs in rural America.”

By contrast, profits are soaring at big grain-processing and agricultural fertilizer companies, such as Archer Daniels Midland , Monsanto and Deere.

Kellogg, the nation’s biggest maker of breakfast cereal, is also being hit by the commodities whammy.

Consumers are just beginning to feel the sticker shock at the cash register for some food items, warns Tyson CEO Bond.

“The cost we and other producers in all proteins are currently incurring are only beginning to be passed on to the consumer,” he said. Since October, the average price that Tyson charges for its chicken products is up 12%.

The U.S. Agriculture Department projects retail food prices will increase by 4% to 5% this year, similar to last year’s increase. The cost for a dozen large eggs is up 35% from a year ago, while milk is up 13% and a loaf of white bread is up 16%, government data show.



Take Kraft. While sales jumped 21% in the first quarter, its gross profit margin slipped to 33.6%, down from 35.5% a year ago.

This is after Kraft aggressively raised prices on two-thirds of its vast food portfolio, which includes Mac n’ Cheese, DiGiorno pizza and Ritz crackers. It also slashed merchant-trade spending on its Capri Sun drinks line to help cover higher commodity costs.

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